Warren, Blumenthal, Welch, Goodlander Investigate Genesis HealthCare Private Equity Bankruptcy and Its Impact on Nursing Home, Assisted Living Residents Across the Country
Genesis may owe potential victims and families more than $600 million in litigation costs
October 8 hearing will consider whether to protect executives from lawsuits during bankruptcy proceedings
Genesis’ victims and other unsecured creditors “may get nothing”
Washington, D.C. — U.S Senators Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), and Peter Welch (D-Vt.), along with Representative Maggie Goodlander (D-N.H.) sent a letter to Louis Robichaux IV and Russell Perry, Co-Chief Restructuring Officers of Genesis HealthCare, and Joel Landau, Managing Partner of Genesis’ private equity owner, pushing for information related to Genesis’ private equity-caused bankruptcy and its apparent attempt to use the bankruptcy process to wipe away the company’s debts to victims and businesses by selling the company at a discount to insiders.
“Patients and family members hurt by Genesis, together with taxpayers who have paid hundreds of millions of dollars for patient care at Genesis through the Medicaid and Medicare programs…deserve answers regarding the cause of this bankruptcy,” wrote the senators.
In 2007, private equity firms JER Partners and Formation Capital bought Genesis HealthCare. In 2011, the firms sold Genesis’ 180 facilities and nearly 20,000 assisted-living and long-term care beds to a health care real estate investment trust for $2.4 billion. The sale, which mirrors a similar move by the private equity owners of the now-defunct company Steward Health Care, left Genesis with costly leases and long-term debts on real estate it once owned, while securing payouts for the private equity owners and other Genesis investors.
By March 2021, the sale of its real estate assets had led Genesis to the brink of bankruptcy. As a result, Genesis accepted a $100 million investment over two years from Mr. Landau’s private equity firm ReGen Healthcare LLC in exchange for 93 percent equity and the right to appoint two board members. ReGen acquired the right to appoint an additional board member in 2023 in exchange for an additional $25 million.
ReGen’s takeover of Genesis has led to worse outcomes for patients. Since the takeover, the proportion of Genesis facilities rated above average (4-5 stars) by the Centers for Medicare & Medicaid Services declined from 38 percent to 15 percent, and the average facility rating fell from 2.98 to 2.29 stars. Even before the ReGen takeover, Genesis had a history of mistreating nursing home patients, including failing to properly monitor, treat, and care for patients, leading to “serious, and sometimes fatal, infections and accidents.”
Earlier this year, Genesis, struggling under the weight of its mounting debts, filed for Chapter 11 bankruptcy. Prior to filing for bankruptcy, Genesis spent $8 million per month to settle and defend tort claims, and owes $259 million in outstanding litigation costs. The total amount Genesis owes is likely much higher as 165 claims remain pending, with some estimating that Genesis owes potential victims more than $344 million more. Genesis also owes more than $12 million in unfunded liabilities to its employees’ pension fund, and more than $160 million to medical supply, pharmacy, and other vendors. Despite these liabilities, Genesis’ sale plan would dedicate only $15 million to pay administrative claims and unsecured creditor debts, and Genesis’ Chief Restructuring Officer acknowledged that victims “may get nothing.”
“Genesis appears to be attempting to use the bankruptcy system to escape its liabilities, leaving businesses and victims in the lurch,” wrote the lawmakers.
Shortly after filing for bankruptcy, Genesis announced it had struck an initial deal to be acquired by affiliates of ReGen. This type of insider bid is called a “stalking horse” bid, which experts have warned often results in a lower recovery for creditors and may allow insiders to shed the company’s debts without having to pay a competitive price for the estate. Parties in the Genesis bankruptcy have testified that the bidding process is designed to favor the insider bid and that it will chill bids from other potentially interested companies.
ReGen is owned by Pinta Capital Partners, the private equity group co-founded by Mr. Landau and David Harrington. David Gefner, a Director at Pinta Capital, is also a co-founder of Perigrove, a private equity firm that took over prison health care company Corizon Health, formerly one of the largest providers of prison health care services in the country and also the repeat target of serious claims of malpractice and patient neglect. After filing for bankruptcy in 2023, Corizon attempted to shield itself from victims and families by employing the so-called “Texas Two-Step,” a maneuver through which companies leverage bankruptcy proceedings to attempt to evade liability.
“Mr. Landau’s connection to Perigrove through Pinta Partners raises concerns that Genesis could be attempting to repeat Corizon’s playbook – this time using a stalking horse bid rather than the Texas Two-Step – in order to avoid claims and liabilities. The hundreds of victims of Genesis’s mismanagement deserve better,” wrote the lawmakers.
The lawmakers asked the executives to provide, by October 21, 2025, information about the structure of Genesis and ReGen, along with information about Genesis’ bankruptcy and potential sale to insiders, including Genesis’ plan to ensure a potential sale does not lead to the same practices that led to the deterioration of the quality of care in Genesis facilities.
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